iTV Ad Dollars Won't Be Grand, Shopping Will
- by June 14, 2001
According to a new digital television report, revenues from iTV shopping will total $4.3 billion by 2005, with the bulk of buying taking place on iTV shopping programs where viewers use a remote control instead of a phone to buy showcased items. While Jupiter analysts predict advertising on iTV to represent a $4.5 billion business, it will be fragmented across networks, carriers and third-party response networks.
"Even though our research shows that there's money to be made in the iTV space, carriers, programmers, advertisers and merchants are struggling with models to justify iTV deployment," said David Card, Jupiter senior analyst. "Outside of video-on-demand, the new business that iTV brings will divide evenly between shopping and advertisements. However, advertising won't account for more revenues than shopping until 2005, due in part to current US economic conditions, Internet advertising's seeming ineffectiveness and the lack of a common national iTV technology platform."
Jupiter analysts have identified three forms of iTV shopping that together will yield $4.3 billion in revenue:
1.· ITV Shopping Programs ($3.4 billion) - Viewers use a remote control instead of a phone to buy items showcased on infomercials or shopping channels such as QVC or USA Networks' Home Shopping Network.
2.· ITV Malls ($0.7 billion) - Viewers tune in to a Web-like catalog or store that carriers and their merchant partners provide within their own areas.
3. ·Integrated iTV Shopping ($0.3 billion) - Viewers interact with offers embedded in commercials or programs, timed to take advantage of impulse buying.
According to Jupiter analysts, channel shift will drive iTV shopping. Over the next five years, Jupiter forecasts that $5.5 billion in revenues from shopping channels and infomercials will cumulatively shift from the phone to iTV. Shopping via iTV will be considerably more lucrative for the parent companies of major shopping channels (e.g. Home Shopping Network, QVC and Value Vision) and will eventually provide cost savings by replacing some call-center activity.
iTV shopping faces the same barriers as Internet shopping, such as the ability to touch a product, lack of instant gratification and additional shipping costs. Although iTV shopping may exploit impulse buying because of factors such as persistent connection and video merchandising, Jupiter analysts forecast that iTV spending per household will be significantly less than the amount that an average online shopping household spends.
Even though the near-term iTV ad revenue picture is cloudy - with Jupiter projecting interactive advertising to comprise less than 10% of US TV advertising - programmers, advertisers and agencies must experiment today because revenues will be bigger than both iTV commerce and Internet advertising. In contrast to the Internet (where there is a stable set of technologies and platforms), iTV will be fragmented by geography and technology for the next 18 to 24 months.
Jupiter analysts, however, believe this fragmentation presents a unique opportunity for third-party advertising networks because they will be the only ones able to service national iTV campaigns.
